I.
Creating
a debt
collection
procedure
for
Bulgaria
both out
and in
court
according
to
Bulgarian
Law?
What
are the
expenses
for
Court
procedures?
Collecting outstanding debts in
Bulgaria
is a
difficult
and
rather
expensive
procedure,
in the
other
hand a
lot of
efforts
must be
put in
collecting
the
amount
in an
out-of-court
way.

Usually
costs
are
around
10% of
the
claim,
but for
claims
below
BGN 600*
they can
reach
50% of
the
claim.

2).
Cumbersome
procedure
of
hearings
setting
and
lawsuit
management.
Judges
at first
instance
courts
(especially
in the
capital
Sofia,
Sofia
District
Court
and
Sofia
City
Court)
are
overwhelmed
(15-20
court
cases
are
appointed
for
hearing
on the
same
day).If
the case
is
postponed
the new
court
session
is
usually
more
than 2
months
away
(e.g.
for
Sofia
City
Court
3-4
months
later).
The Law
allows
for
numerous
appeals
and case
trials
before
higher
instance
courts.
An
appeal
can run
for more
than a
year.
The
creditor
has to
be
patient
and wait
for two
or three
years to
receive
the
court
ruling
together
with the
legal
sanction
against
the
debtor
a court
decision
and a
writ of
execution.
A new
procedure
must be
started
for the
voluntary
or

compulsory
execution.

3).
Cumbersome
procedure
despite
amendments
in the
Civil
Procedure
Code
passed
in 2002
serving
summons
for the
first
court
session
is
extremely
problematic.
The
court
postpones
the case
several
times.
In cases
of
District
or City
Courts
irregular
summons
can well
take a
whole
year
thus
enormously
increasing
the
duration
of the
process.

4).
There
are
numerous
cases of
controversial
opinions
of
experts

examination
which
reveals
experts'
corruption.
On many
occasions
the
court
appointed
expert
directly
contacted
the
parties
to make
them bid
for a
favorable
expert
opinion.

2.
Execution
procedures.

After
the
court
decision
is
passed
in 95%
of the

cases
the
debtor
does
nothing
to repay
the
debt,
obliging
creditors
to
resort
to
execution
procedures
for
compulsory
collection
through
a
bailiff.
Despite
the
amendments
in the
Civil
Procedure
Code
related
to
compulsory
execution
to make
it
faster
and more
efficient
,
companies
still
face
many
problems.
Find
below
some of
the
draw-backs
listed :

1).
Cumbersome
process
of date
setting,
procedure
management
and
summons
serving.
The
execution
procedure
is
equally
difficult.
It
cannot
be
established
if

there is
such a
debtor,
private
individual
or
trader,
at the
addresses
given by
the
first

_____________________
*1?
=1, 955
BGN (leva)

Bulgarian
national
Bank
09.09.2005

instance
court or
by the
creditor;
a
creditor's
representative
had
better
personally
supervise
the
serving
of
papers
and
summons.
Often
the
bailiffs
consider
the fact
of the
debtors
not
being
found at
the
address
given by
the
creditor
to be
sufficient
enough
reason
to
abandon
execution.
The
creditor
is
required
to
present
information
about
the bank
accounts,
the
existing
realities,
movables
and
other
debtors
assets.
In most
cases
the
creditor
cannot
provide
such
data and
blocking
of bank

accounts,
distraint
on
movable
assets
and
realities
get
delayed.

2).
Bailiffs
and
clarks
work in
extremely
bad
conditions
and they
are
overwhelmed.

3). The
law
concerning
public
auctioning
is
clearly
set in
favour
of the
debtor
(art.
367 to
art.
389, as
well as
art. 348
of the
Civil
Procedure
Code).
For the
public
sale the
auctioneer
gets a
low
commission
5% of
the sale
price.
The sale
expenditures
are in
most
cases
paid by
the
creditor.
A
distrained
item is
auctioned
at the
price
set by
the
court
appointed
expert,
no
market
price is
taken
into
consideration.
By law
the item
cannot
be sold
below
the
price
set by
the
expert.
In case
this
occurs,
the
vendor
must
cover
the
difference
out of
his own
pocket .
Companies
consider
that the
text of
art. 371
if the
item is
not sold
within 3
months
from
delivery
to the
auctioning
shop or
from the
announcement
of the
sale,
the
article
is free
of
distraint
and is
to be
returned
to the
debtor
directly
favours
the
debtor;
within
the
3-month
period
the
creditor
can ask
for a
second
auctioning
and in
this
instance
paragr.
2 of the
same
article
allows
for an
up to
20%
reduction
of the
price
set by
the
expert.
If the
item
remains
again
unsold,
it is
free
from
distraint
and is
returned
to the
debtor.
The same
holds
true for
auctioning
of
realties
in
case
there
are no
vendees
or valid
offers,
a second
public
sale can
be
organized
at 80%
of the
price
set. If
the
realty
is still
not
sold, it
is free
from
execution
and the
distraint
is
lifted
by
bailiffs
request.

3.The
expenses
for
Court
procedures

I may
not
include
in this
resume
all
applicable
taxes as
they are
set in a
schedule
of taxes
which
has over
60
items.
However
I will
mention
some for
comparison
and
general
information.

State
tax on
submitting
a claim
4% of
the
amount
of the
claim
(if
property
claim
the
amount
is ?? of
the tax
value of
the
immovable
property)
but no
less
than 30
lv. (EUR
15);

State
tax on
submitting
appeal
?? of
the stat
tax paid
for
initiating
the
claim;

State
tax on
claim
for
issuing
of writ
of
execution
based on
non-court
title of
execution
2% of
the
amount
of the
claim;

There
are
various
other
taxes
for
different
motions
before
the
court,
for
receiving
certificates
etc.
Also
there
are
costs
for
experts
appointed
by the
court
which
are
estimated
by the
judges.
Such
costs
depend
on the
complexity
of the
expert
opinion
and on
the
material
which
should
be
reviewed.
They
vary
between
50 leva
and 3000
leva
dependant
on the
kind of
expertise.

The Supreme
Advocacy Council has established
a schedule of minimum lawyers fees
for representation on court cases.
For civil and trade cases this fee
is 2% on the amount of claim for
claims over 10 000 BG leva.
Up to 10 000 BG leva is 560
leva (and there are smaller fees
for less amounts). Normal practice
of the lawyers (with higher qualification
and reputation) is to collect double
the minimum lawyers fee.

3.
Additional
costs of
collection
through
litigation

Legal
charges
are :

-For
Firs
Instance:
4% of
the
total
claim
amount

-For
Second
Instance:
2% of
the
total
claim
amount

-For
Third
Instance:
2% of
the
total
claim
amount

These
are the
court
taxes to
start
the
procedure
and they
are paid
in
advance.

Fee for
the
lawyer
is:

-When
the
total
claim
amount
is
between
5000 BGN
and 10
000 BGN,
it is
between
340 BGN
and 5000
BGN +4%
of the
total
claim
amount.

- When
the
total
claim
amount
is over
10 000
BGN, it
is
between
540 BGN
and 10
000 BGN
+2% of
the
total
claim
amount.

Usually
lawyers
are paid
in
advance
the main
fee
and the
percentage
at the
end of
the
case.

Before
starting
the
litigation
procedure,
we
inform
you
about
the
chances
of
success,
thereby
preventing
the
occurrence
of high
expenses
for
unsuccessful
cases.

The
total
claim
amount
is made
by the
main
claim
amount,
added
with
interest.

Furthermore,
please
note
that
after a
successful
collection
through
litigation,
the
judge
automatically
decides
that the
debtor
must
compensate
a part
of the
legal
costs.

III.
Out-of-court
debt
collection
by
professional
agencies

In the
developed
countries
out-of-court
debt
collection
by
professional
agencies
has an
almost
150-year
history.

The
advantages
of debt
collection
by
professional
agencies
are the
following: